Analyst: No Headwinds Ahead to Hurt Apple’s Margins
Apple (NASDAQ:AAPL) is renowned for refusing to sacrifice profit margins for market share. The company even kept the price of the iPhone 5C — the so-called low-cost iPhone — much higher than analysts expected, despite industrywide concerns that the company prices its products far too high to successfully break into emerging markets.
As one would expect of a company as successful as Apple, a lot of thought has gone into the marketing and the pricing of its products. Apple built its reputation by delivering products that revolutionized how people communicate with each other, how they consume media, and how they live on a day-to-day basis, making technology a part of everyday life the way it never was before. It helped that the company tended to under-promise and over-deliver.
This was helped by Apple co-founder Steve Jobs’s ability to mesmerize audiences by charismatically creating a “reality distortion field,” a science fiction term that has often been used to describe his belief that wanting and willing something could make it happen. His persona and the products were created with that belief as a guide made Apple a brand with huge cachet. But Jobs was also a good businessman, and skill also played a role in making Apple the company it is today.
“Apple has never followed the trend in passing along the savings,” IHS iSuppli analyst Michael Yang told Bloomberg last month. “As long as Apple can make people pay, it will stay on this track.” Of course, part of the company’s long-term marketing system is its pricing: Apple has leveraged its brand’s image to carve out market share. Therefore, Apple risks harming the cachet of owning one of its products by lowering the price of its iPhones or iPads.